9911796707
TMI Blog2024 (8) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... Haryana challenging the imposition of huge liability of an amount of Rs. 1,28,19,35,845/- under Section 201 (1) of the Income Tax Act, 1961 (hereinafter referred as 'Act, 1961') on the ground that the Land Acquisition Officer (hereinafter referred as 'LAO') had failed to deduct the tax at source upon interest on enhanced compensation paid under Section 28 of the Land Acquisition Act, 1894 (for short 'the Act, 1894'). 2. Brief facts are that the petitioner was conducting the duty of disbursement of compensation, enhanced compensation and interest on the compensation in lieu of acquisition of land in terms of Section 28 of the Act, 1894. The compensation received for acquisition of agricultural land is exempted from deduction of tax at sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n compensation/enhanced compensation would form part of the income from other sources in terms of Section 56(2)(viii) of Act, 1961 and therefore, TDS was required to be deducted and deposited, to which it was answered by the petitioner as under: ""We were deducting TDS upto September, 2012 on payment of interest on compensation/enhanced compensation u/s 194A. But various landholder whose land was acquired started filing legal cases with various courts including Hon'ble High Court for refund of TDS deducted from that payment i.e. interest payments. As per instruction from Sh. M.S. Sangwan, DRO vide order dated 09.10.2012 on the noting sheet (copy of it being provided), I was directed "As per opinion of ADA (P), therefore, TDS may not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be penalized for failure of TDS. It has been vehemently argued that no TDS was deductible on the interest of enhanced compensation for the relevant period. Further, it is stated that the Income Tax Department filed review applications seeking review of the orders passed by the High Court restraining from deducting TDS on interest received on enhanced compensation, and the same were subsequently decided on 02.02.2016. 7. Learned counsel therefore submits that the petitioner cannot be penalized, and the order dated 22.03.2016 passed by the respondent for Assessment Year 2015-16 imposing huge liability of Rs. 1,28,19,35,845/- was unjustified. 8. On the other hand, learned counsel appearing for the Department/Assistant Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct tax at source in terms of Section 4 read with section 2 (31) (vi) of the Act. 12. Learned counsel submits that in the case of CIT vs. Bir Singh (HUF), ITA No.209 of 2004, decided on 27.10.2010, Manjet Singh (HUF) Karta Manjeet Singh vs. Union of India and others, CWP No.15506 of 2013 decided on 14.01.2014, the High Court held that additional compensation and interest are liable to tax as per Section 45 (5) (b) and also as per section 2 (28A) which defines interest. It is stated that the petitioner had wrongfully unilaterally decided to withhold tax and therefore, was liable to penalty under section 201 of the Act. 13. It was further submitted that the review applications filed in the cases of Jagmal Singh and another vs. State of Harya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dated 09.10.2012 issued by the District Revenue Officer on the noting sheet, he was directed that "as per the opinion of the ADA(P) i.e. Additional District Attorney, TDS may not be deducted". The document was produced by the petitioner before the Income Tax Authorities. In terms of directions issued by the superior officer, the deductions were therefore not made. 18. In the case of Sh. Satpal & others Vs. St. of Haryana, Additional District Judge, Faridabad held that the deduction of TDS was illegal and the LAO was directed to pay the same to the landowners vide order dated 20.09.2014. In another case of HUDA v/s Mandir Nar Singh Puri & others, C.R. No. 7953 of 2013, decided on 21.12.2013, the High Court passed orders of restraining fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leasing the interest amount without deducting TDS therefore, cannot be a reason for imposing penalty in terms of Section 201 and 201 (1A) of the Act, 1961 and cannot be justified. 21. The Land Acquisition Officer cannot be made to suffer on account of the orders passed by the Court. Penalty imposed on him by the Assistant Commissioner of Income Tax, TDS Circle vide its orders dated 22.03.2016 and 31.03.2016 are liable to be set aside. 22. Accordingly, these writ petitions are allowed. The orders dated 22.03.2016 (Annexure P-5 in CWP-14794-2016) and 31.03.2016 (Annexure P-5 in CWP-14811-2016) passed by Assistant Commissioner of Income Tax, TDS Circle are quashed and set aside. If any amount has been deposited, the same shall be refunded to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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